Predicting Savings From Adolescence to Young Adulthood: A Propensity Score Approach

Abstract

This paper examines the progression of savings between adolescence and young adulthood. Using data from the Panel Study of Income Dynamics, we ask whether the likelihood of having a savings account in young adulthood and the amount of savings can be significantly predicted by two factors: having a savings account during adolescence and having parents who own assets. Descriptive statistics reveal that adolescents with savings accounts are more often White, employed, and live in households in which the head is married, has more education, and owns assets. Propensity score analyses confirm that young adults are more likely to have a savings account when they have a savings account as adolescents. Some evidence suggests that adolescents whose parents have savings on their behalf and have higher net worth are more likely to have higher amounts of savings as young adults. Findings suggest that parents play an important role in modeling saving habits for adolescents. Further, our findings suggest that having a savings account in adolescence leads to an increased likelihood of having a savings account in young adulthood; however, this finding requires confirmation in future research.

Factors that influence the financial literacy of young Spanish consumers

“…It should be noted that this influence is positive for the HISEI variable, 10 although the mother's years of education have a negative sign. These results are in line with the conclusions other studies have reached on the influence of parents on their children's financial knowledge (see Grinstein-Weiss et al, 2012;Gudmonson & Danes, 2011or Friedline, Elliot, & Nam, 2011. However, while the mother's educational level is usually a key positive factor in the case of reading, mathematics and science skills (see Baker, Goesling, & LeTendre, 2002), its effect on financial literacy shows a negative influence in our study.…”

Financial Outcomes in Adolescence and Early Adulthood in Australian Longitudinal Data

“…Studies have found that most adolescents hold bank accounts and that young adults are even more likely to hold accounts (Friedline, Elliott and Nam ; Elliott ; Friedline ; Kim, Kim and Moon ). In Australia, bank account holding among young adults is nearly universal, as welfare system payments managed by the Department of Human Services (DHS) are often deposited directly into bank accounts (DHS ).…”

“…Although adolescents commonly hold bank and savings accounts, the balances in those accounts tend to be modest (Elliott ; Friedline ; Loke, Choi and Libby ). Low account balances frequently persist into young adulthood because of schooling and large non‐discretionary expenses (Friedline, Elliott and Nam ; Elliott ; Lobaugh, Stephens and Simpson ). Adolescents appear to make their savings decisions in the same way as adults, with considerations of trade‐offs between present and future outcomes and with the development of more conservative risk preferences and precautionary motivations (Otto ; Friedline ; Sutter, Zoller and Glätzle‐Rützler ).…”

“…Banking and savings Angulo-Ruiz and Pergelova (2015) Adolescents & young adults * Elliott (2012) Adolescents & young adults Friedline, Elliott and Nam (2011) Adolescents & young adults Friedline (2012) Adolescents Kim, LaTaillade and Kim (2011) Adolescents Kim, Kim and Moon (2016) Adolescents & young adults Loke, Choi and Libby (2015) Adolescents *Otto (2013 Ribar (2012) Adolescents & young adults Harding and Szukalska (2000) Adolescents Mallett, Rosenthal and Keys (2005) Adolescents & young adults * McNamara (2015) Adolescents & young adults Ralston et al (2017) Adolescents Ribar (2015) Young adults Ribar (2012) Adolescents & young adults Lundberg, Romich and Tsang (2009) Adolescents Ribar (2015) Young adults Superannuation Ali et al (2015) Young adults Parrish and Delpachitra (2012) Young adults Financial satisfaction and anxiety Kim, LaTaillade and Kim (2011) Adolescents Ribar (2015) Young adults Ryan (2014) Young adults Shim et al (2009) Young adults Financial wellbeing Shim et al (2009) Young adults * Sorgente and Lanz (2017) Young adults…”

Young people's perceptions of the responsibilities of organizations promoting financial capability

“…Previous studies concerning youth financial capability have dealt with money management and financial behaviour, such as factors influencing saving behaviour (Perry and Morris, 2005;Friedline et al, 2011), attitudes towards money (Oleson, 2004;Engelberg, 2007), the connection between financial knowledge and debt (Lachance et al, 2006;Robb and Sharpe, 2009), and factors influencing credit behaviour (Wang and Xiao, 2009;Huston, 2012;Lachance, 2012). The influences of financial education programmes for the young have been studied too (e.g.…”